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Time to stop coddling social media consumers

Posted January 7th, 2014 in social media, social network and tagged , , by Alton Drew

Author Bernard Marr today posted an article on Linkedin (NYSE: LNKD)discussing a class action suit filed against social media giant Facebook (NASDAQ: FB).  The plaintiffs allegedly have taken issue with, you guessed it, Facebook’s privacy policy, specifically, Facebook’s practice of reviewing content posted or shared by users in order to create user profiles that can then be provided to advertisers.  The plaintiffs want the social media giant to provide consumers with more transparency as to how their content is being used.

We’ve heard this song and seen this dance before.  Social media consumers believe that they “own” these companies simply because they use the companies’ services.  Profiling a social media consumer based on content they post or write is an important part of a social media company’s business model. Expanding a consumer’s ability to say yes or no to how they are profiled increases operational expense and reduces the firm’s revenues.  If the consumer doesn’t like the firm’s management practice, then the consumer should step.

Breaking up with a social media platform can be hard to do for some consumers.  Deleting photos, the names of friends, addresses, etc., is time consuming.  What social media companies should do to make the consumer’s exit as pain free as possible is totally and completely erase the exiting consumer’s profile, including any data stored on the consumer and ensuring that nothing on the exiting consumer is shared with entities that want to purchase consumer data.

Forcing more transparency, increasing the amount of consumer coddling, however, is not the answer.  Such an approach tramples on entrepreneurial freedom and a firm’s business judgment.  Let the check on a firm’s behavior occur on its bottom line with an organic reduction in demand for its services.

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With minorities creating disproportionate amount of tweets on Twitter, how will ads look?

Twitter recently filed papers for an initial public offering earlier this week to become the last of the three prominent social networks to raise capital on a yet to be announced public stock exchange. Twitter is reportedly trying to raise up to $1 billion to put toward working capital, operating expenses, and capital expenditures.

According to the Pew Research, some 15% of online adults use Twitter, with 8% using it on any given day. Twenty-eight percent of online African American adults uses Twitter, with 13% using the social network on nay given day. In addition, 26% of online users age 18-29 are using Twitter.

Pew also notes there is a high correlation between Twitter usage and mobile technology usage. If you’re tweeting, it’s a good chance you are using a smartphone. Specifically, 16% of smartphone users are using Twitter on their smartphones. African American and Latinos, demographic groups known for their disproportionate use of smartphones, will more likely lead in the use of Twitter via mobile devices.

Eighty-five percent of Twitter’s 2012 revenue came from advertising, according to an analysis done by Forbes.com. That amounted to $269 million out of a total of $317 million in 2012. Granted, social media is a different beast from traditional media, but there may be concerns about discrimination in advertising if Twitter follows the poor lead of its broadcast brethren. So far that concern hasn’t been raised by advocates for fairness in advertising, and I don’t see who would be responsible for addressing the issue, should it become one. For example, the Federal Communications Commission has no jurisdiction over social networks, but the Federal Trade Commission does flex its muscle on issues of competition in markets, privacy and advertising, so Twitter may wish to nip discrimination in advertising very early and avoid one regulatory nagging point.

Alton Drew serves as a managing director of The Drew Fonza Project, a public policy research and consulting firm. He provides public policy analysis for broadband investors, municipal bond investors, private equity firms, hedge funds, investment banks, industry associations, and individual investors.
Visit http://www.drewfonza.com to purchase reports on political environments impacting your telecom investments or to request a customized report. E-mail him at alton@drewfonza.com.

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Americans for Prosperity getting older Americans interested in social media

For the past two days I’ve been enjoying the dry heat of Orlando, Florida. It’s always good to come back to my adopted home state and got the chance to visit with my law school chums as well as witness another type of heat here in Florida: The Seventh Annual Defending the American Dream Summit. Besides the occasional bashing of President Barack Obama’s health care and economic policies, their were panels on how to use social media as a platform for getting their political advocacy messages out. This is pretty standard fare until you appreciate who made up the majority of the audience: older Americans.

You couldn’t help but notice. This group definitely dominated the Summits demographics and presented another reason for broadband adoption: the demand for further democratization on the part of our graying population and another source of energy for individuals who have seen a lot and have plenty to say, not letting a little thing like age take them out of the discussion.

Listening to the questions these citizens were asking about social media while they incorporated their observations about the nation’s political climate in their comments tells me that they were interested in a little more than how to get their kittens down out of a tree.

Look out young Twitter and Facebook users. Grandma and grandpa are coming.

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Is Social Media Just a Fad?

Posted June 21st, 2012 in Broadband, Facebook, Internet, social media and tagged by Alton Drew

The New York Times recently posted a debate about the importance of social media. Keith Hampton, a professor of communications at Rutgers, made the following point in his post:

“Only a small number of social media are used by a majority of Americans (i.e., Facebook), but many others have obtained a critical mass with niche populations. The biggest threat to discontinuance does not rest with the possibility that social media are a fad, but with their proprietary nature. The failure of a single telephone company does not undermine the value of the telephone. However, because social media are both brands and channels of communication, a significant strategic or technological failure is the most likely impetus to mass abandonment.”

Social media is not a fad. It will, like telephone networks, reach critical mass, and I guess, based on his analysis, stay on that plateau until the next big thing. I guess at critical mass, social media becomes a utility, like its traditional media kin …. at least until the next Facebook.

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The Downside of Broadband Adoption

The New York Times has a piece on the downside of broadband adoption. It seems like low-income kids enjoy playing video games and hob knobbing on social media sites like Facebook. (No wonder Zuckerberg wants to target 13 year olds.)

As quoted in The New York Times, “Despite the educational potential of computers, the reality is that their use for education or meaningful content creation is minuscule compared to their use for pure entertainment,” said Vicky Rideout, author of the decade-long Kaiser study. “Instead of closing the achievement gap, they’re widening the time-wasting gap.” In short, the time-waste gap is the new digital divide.

The irony of it is that the Federal Communications Commission wants to spend $200 million to teach households how to put technology to productive use. The FCC will be teaching households how to be productive? Really?

Cynicism aside, turning the computer at home into true capital stock by teaching young people how to use it could be a boon to employers looking for young employees with keystroke and data entry skills. Also, the efforts may help engender the next self-taught programmer who comes up with the next big idea in tech, whether it’s a new app or a new type of media company.

Microsoft and Best Buy are helping to fund some similar digital literacy initiatives so this may be a good investment in the long term for American labor. What the markets need, however, is for young people to put any digital literacy they garner to productive use.